Assessment orders against non-existent company after amalgamation declared void ab initio by tribunal

ITAT Delhi quashed both draft and final assessment orders passed against a non-existent entity following company amalgamation. The Assessing Officer issued orders in the name of the erstwhile company which had already merged with a successor company. Despite DRP directions being issued to the successor company, the final assessment order was again passed against the non-existent entity using the old company's PAN. Applying Supreme Court precedent in Maruti Suzuki and Delhi HC ruling in Sony Mobile, the tribunal held the assessment order void ab initio for being passed against a non-existent entity.

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Issues Involved:
1. Validity of the assessment order passed against a non-existent entity.
2. Procedural irregularities and their impact on the assessment order.
3. Jurisdictional issues related to the merger of entities.

Summary:

Issue 1: Validity of the Assessment Order Against a Non-Existent Entity

In ground nos. 1 and 2, the assessee challenged the validity of the assessment order dated 30.03.2021 for the assessment year 2016-17, arguing that it was passed against a non-existent entity. The assessee, formerly known as Boeing International Corporation India Ltd., had merged with Boeing India Pvt. Ltd. as per the merger scheme dated 27.02.2018, effective from 01.04.2017. The Assessing Officer (AO) was informed of this merger via a letter dated 10.04.2018. Despite this, the AO issued both the draft and final assessment orders in the name of the erstwhile company. Citing the Tribunal's decision in ITA No.9765/Del/2019 for AY 2015-16 and the Supreme Court's ruling in PCIT vs. Maruti Suzuki India Ltd. (2019) 416 ITR 613 (SC), the assessee contended that the assessment order was void ab initio.

Issue 2: Procedural Irregularities and Their Impact on the Assessment Order

The Department argued that the name of the erstwhile company was mentioned due to procedural issues in the ITBA system, which triggers proceedings based on the name in the return of income. They contended that this was a mere procedural irregularity and could be rectified. However, the Tribunal noted that the draft assessment order dated 21.12.2019 and the final assessment order both mentioned the PAN of the erstwhile company, reinforcing that the orders were passed in the name of a non-existent entity. The Tribunal rejected the Department's argument, emphasizing that the AO was aware of the merger and still issued orders in the name of the dissolved entity.

Issue 3: Jurisdictional Issues Related to the Merger of Entities

The Tribunal referred to the Supreme Court's decision in PCIT vs. Maruti Suzuki India Ltd., which held that orders passed in the name of a non-existent entity are void ab initio as it affects the jurisdiction of the AO. The Tribunal distinguished the present case from CIT vs. Mahagun Realtors Pvt. Ltd. (2022), where the Supreme Court upheld an assessment order mentioning both the amalgamating and amalgamated companies due to the peculiar facts of that case. The Tribunal also cited the Delhi High Court's decision in CIT vs. Sony Mobile Communications India Pvt. Ltd., which applied the Maruti Suzuki ratio to quash an assessment order passed in the name of a non-existent entity.

Conclusion:

Applying the ratio from Maruti Suzuki and Sony Mobile Communications, the Tribunal held that the assessment order passed in the name of a non-existent entity, Boeing International Corporation India Ltd., was void ab initio and quashed it. Consequently, other grounds raised by the assessee became purely academic and were not adjudicated, though the issues were kept open.

Order pronounced in the open court on 27/03/2024.

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